Application of the IFR: phase 1 final guidance

Published 24 03 2016

We have published our final guidance for the parts of the Interchange Fee Regulation (IFR) that came into force by December 2015.

The guidance gives clarity on how the IFR will be applied, monitored and enforced in the UK. Specifically it sets out how we will monitor compliance with caps on interchange fees and on certain business rules.

What are the key points?

The final guidance we are publishing here confirms our approach for the first phase. It provides clarity on:

to whom the IFR applies

interchange fee caps and how we will consider who may be exempt

our approach to monitoring compliance with the IFR

our powers and procedures under the IFR

penalties under the IFR

Separately, but relevant to this guidance, we have also published a final determination which confirms which card schemes operating in the UK are captured by the IFR interchange fee caps. Read more about this.

Who should read this final guidance?

The guidance is relevant to payment card schemes and their participants (operators, payment service providers and infrastructure providers).

It may also be of interest to merchants and some consumers who are interested in understanding how credit and debit card charges are affected by the cap.

What are the next steps?

Over the summer we will publish a new consultation for Phase 2, focusing on the remaining parts of the IFR that have not been captured.

How do I get in touch?

You can contacts us with questions about our role in monitoring the IFR by sending an email to cards@psr.org.uk.

Further information

During consultation we were contacted by a number of merchants who said they had not seen a reduction in their MSC – despite the new cap on interchange fees.

It’s important to note that interchange fees are just one part of an MSC and there are other factors that need to be considered when attempting to understand why charges have not been reduced across the board.

Nonetheless, we recognise that many merchants want to get a better rate. We recommend merchants contact their acquirer to discuss their MSC and consider shopping around to see what other rates are on offer.